It’s up to each firm to decide how to communicate the need for a vulnerability assessment, why MARS is used. That said, we can offer some advice and examples, based on our experience. MorganAsh has been assessing vulnerable people for over twenty years.
Why do I need a vulnerability assessment?
There are several answers to this. First, it’s driven by legislation. Firms are required to assess and provide evidence of their customers’ vulnerabilities. Why? Government wants to be sure that people are provided with products and services which are suitable for them – and, if they are vulnerable, that they don’t experience ‘poor outcomes’ compared to someone who is not vulnerable. Regulatory bodies like the Financial Conduct Authority (FCA) and Ofgem are driving this within their respective sectors.
Second, it allows firms to provide products and services which are suitable for each consumer, and don’t expose those consumers to potential harms or poor outcomes.
Third, it enables firms to tailor communications to suit different types of consumers, to ensure that the way consumers are communicated with works well for each person, regardless of any vulnerability.
Fourth, it enables firms to personalise their services to meet each consumer’s need, and to then offer complementary services to help consumers to build trust, customer loyalty and customer advocacy.
So, it is always in the interest of the consumer to undertake a vulnerability assessment. It is best viewed as understanding their individual needs. However, assessments are not mandatory and it is the consumer’s right to decline and keep information personal. If a customer declines to provide the information, then it’s not unreasonable to expect them to have catered for this in other ways.
Who is vulnerable?
Most people don’t tend to think of themselves as ‘vulnerable’ unless their vulnerability is severe and ongoing. At any one time, around half of the UK’s population can be defined as having characteristics of vulnerability. And over the course of our lifetimes, everyone is vulnerable in some way, at some point. People lose jobs, get divorced, become physically ill, have issues with anxiety and mental health, suffer a bereavement – and so on. For most, none of these issues happen every day, but for everyone they are commonplace. To score high, someone would need to be pretty well off, never been ill, never lost a job ... and so on. This is quite rare. So it is that high MARS ratings are rare.
Avoid using the word ‘vulnerable’
Vulnerability is the word the regulators and industry use for this topic. It is not a word we advocate using with consumers. We prefer to talk about understanding their health, lifestyle and personal circumstances, so they can be provided with solutions and services that are most suitable for them.
The word ‘vulnerable’ has stigma attached to it – and most people would avoid referring to themselves as ‘vulnerable’. It therefore can be counterproductive to ask consumers to judge if they are vulnerable, as this gives misleading and inconsistent results.
What is a poor outcome?
This depends on the vulnerability and what we call the ‘circumstances’ – which is usually the product or service being provided. There are so many combinations of vulnerabilities and circumstances that this question can’t be answered in one way. However, a poor outcome may be being given access to an unsuitable product, not able to pay a mortgageor losing access to energy when there is a critical dependency. The goal is to at least identify foreseeable potential harms and try to prevent these. This is in the best interest of the consumer, and the best way to prevent these is to have a good understanding of any characteristics of vulnerabilities the consumer might have.
Firms may well take the approach to provide services which not only prevent harm, but also those which will engender loyalty and advocacy with the consumer.
How do I explain the Resilience Rating to a customer?
In most cases, there is no need to explain the Resilience Rating to consumers. Rather, explain the assessment process as a need to understand each consumer’s personal circumstances. If there is an adjustment required to the process, then it’s best to explain as part of the personal services, or that it is in response to their specific circumstances.
It is more like Amazon making a recommendation on a book to read based on personal circumstances. There is no need to explain the algorithm behind this – just that the suggested next steps are in response to the consumer’s personal circumstances.
In the rare occasions where a consumer submits a Subject Access Request, we propose saying that the MARS Resilience Rating is explained as being similar to a credit score, except it considers a wider range of resilience areas, and is there to protect the consumer. These include not only wealth, but also health, life events, the capability to engage, the capability to understand financial issues, the person’s support network (often family and friends who help) and how the resilience changes over time. Questions answered in each of these areas are assigned values, from which is extrapolated an overall ‘Resilience Rating’. It’s a measure of the overall resilience.
The concept behind the rating is to make someone’s level of resilience consistent and quickly understandable. It also enables sensitive information to be kept private from those who don’t need to see it. Usually, saying that “it’s similar to a credit score” provides a clear enough picture.
What is the need of a Resilience Rating generated by a computer system?
It’s by far and away the most objective, quick and accurate way of doing so. Humans make subjective judgements, so everyone would judge the same person in different ways. This delivers totally inconsistent results. MARS is both consistent and accurate, with overall results which compare with the FCA’s own Financial Lives survey.
What if the suggested treatments are not appropriate?
MARS suggests specific treatments for consumers, based on the information provided. Treatments can be configured for firms for their specific products and risk appetite. Typically, they are configured by the compliance department. They may make some treatments mandatory and others just suggestions. MorganAsh provides a standard ‘starter’ set to get firms going. Due to the multiple variances of circumstances and characteristics these will never be perfect, and treatments may be suggested that are not always appropriate. The approach is that it is better to suggest a treatment which can be ignored if appropriate, rather than not suggest it and risk a poor outcome.
It’s useful to bear in mind that this isn’t a competition and there is no judgement. Indeed, trying to rig a system where people were mostly resilient, just to bring it in line with an outsider’s expectations, could easily result in people experiencing harmful outcomes – because their needs were overlooked.
The bottom line
To summarise: asking the consumer to complete an assessment either online or over the phone is the best way to get accurate information; the best way to assess that information consistently is to use an objective methodology; the best way to communicate resilience in a way which is easily understood and keeps personal information private is to assign unambiguous values to the results.